The British Empire, which in the early decades of the 20th century covered nearly 30 million square kilometers with a population of 400-500 million people (roughly a quarter of the world's population), was the most extensive area under a single country's rule in history. The Empire had come about through a succession of phases of expansion by trade, settlement[?] or conquest, interspersed with intervals of pacific commercial and diplomatic activity or contraction over 400 years. The territories under British influence were scattered across every continent and every ocean; it was said with some truth that "the sun never sets on the British Empire".

Territories that have been under the control of the British Empire.

The Industrial Revolution greatly strengthened its ability to oppose NapoleonicFrance. By the end of the Napoleonic Wars in 1815, the United Kingdom was the foremost EuropeanPower, and its navy ruled the seas. Peace in Europe allowed the British to focus their interests on more remote parts of the world, and, during this period, the British Empire reached its zenith. British colonial expansion reached its height largely during the reign of Queen Victoria (1837-1901), whom was the first British monarch to be formally proclaimed as Empress. Queen Victoria's reign witnessed the spread of British technology, commerce, language, and government throughout the British Empire, which at its greatest extent encompassed roughly one-fifth to one-quarter of the world's area and population. British colonies contributed to the United Kingdom's extraordinary economic growth and strengthened its voice in world affairs. Even as the United Kingdom extended its imperial reach overseas, it continued to develop and broaden its democratic institutions at home.

England initially supported William the Conqueror's (c. 1029-1087) holdings in France. England's policy of active involvement in continental European affairs endured for several hundred years. By the end of the 14th century, foreign trade, originally based on wool exports to Europe, had emerged as a cornerstone of national policy.

The foundations of sea power were gradually laid to protect English trade and open up new routes. The defeat of the Spanish Armada in 1588 firmly established England as a major Sea Power. Thereafter, its interests outside Europe grew steadily. Attracted by the spice trade, English mercantile interests spread first to the Far East. In search of an alternate route to the Spice Islands, John Cabot reached the North Americancontinent in 1498. Sir Walter Raleigh organized the first, short-lived colony in Virginia in 1584, and permanent English settlement began in 1607 at Jamestown, Virginia. During the next two centuries, England, and, after 1707, Britain extended its influence abroad and consolidated its political development at home.

These sugar plantation islands, where slavery became the basis of the economy, were at first England's most important and successful colonies. The American colonies providing tobacco, cotton, and rice in the south and naval materiel and furs in the north were less financially successful, but had large areas of good agricultural land and attracted far larger numbers of English immigrants.

Later, settlement of Australia (starting with penal colonies from 1788) and New Zealand (under the crown from 1840) created a major zone of British migration. The colonies were quickly granted great degrees of self-government and became profitable exporters of wool and gold.

The victory of forces of the British East India Company at Plassey[?] (1757) opened the great Indian province of Bengal to British rule, though later famine (1770) exacerbated by massive expropriation of provincial government revenues aroused controversy at home. The nineteenth century saw Company rule extended across India after expelling the Dutch, French and Portuguese. Following the Indian Mutiny of 1858 India became a crown colony. The territory continued to expand as Ceylon (now Sri Lanka) and Burma were added to Britain's Asian territories, which extended further east to Malaya and, from 1841, to Hong Kong following a successful war in defence of the Company's opium exports to China.

Sovereign areas already hospitable to informal empire largely avoided formal rule. China, for instance, was not a backward country unable to secure the prerequisite stability and security for western-style commerce, but a highly advanced empire unwilling to admit western commerce, which may explain the West's satisfaction with informal "Spheres of Influence". China, unlike tropical Africa, was a securable market without formal control.
British interest in China began in the early 18th century as the UK became a large importer of tea. This trade created a balance of payments problem to which the British responded by exporting opium to China. Conflict over this trade resulted in the Opium Wars in which Britain decisively defeated China.

After the Opium Wars, British relations with China became complex. Although Britain annexed Hong Kong, most of its trade with China was regulated by treaties which allowed trade through a number of coastal ports. As a result, Britain was interested in maintaining an independent Chinese state since the collapse of China would cancel the treaties and create a bitter struggle for power among the Western Powers. At the same time, Britain was opposed to a Chinese state that was too strong, because this would allow China to cancel or renegotiate its treaties. These interests were responsible for the two-sided nature of British policy in China. Britain provided the Qing dynasty with aid during the Taiping rebellion, but at the same time engaged in punitive expeditions against the Qing court.

In Tibet, expanding British influence in India resulted in the rulers of Tibet responding by claiming to be subordinate to and under the protection of China.

The British colonial system began to decline at the end of the seventeenth century. The empire became less important and less well regarded. The British defeat in the American War of Independence (1775-1783) deprived it of its most populous colonies. This loss of the southern American colonies was coupled with a realization that colonies were not particularly economically beneficial. The predominance of Adam Smith and laissez-faire capitalism encouraged the British to grant their colonies self-government. This is sometimes referred to as the end of the "first British Empire", indicating the shift of British influence from the Americas between the 16th and 18th Centuries to the "second British Empire" of Africa and especially India from the 18th century.

The fight against Mercantilism and the old colonial system was led by a number of liberal thinkers, such as Richard Cobden[?], Joseph Hume[?], Francis Place[?] and John Roebuck. The men and their disciples considered formal imperialism wasteful. It was realized that the costs of occupation of colonies often exceeded the financial return to the taxpayer. In other words, formal empire afforded no great economic benefit when trade would continue whether the overseas political entities were nominally sovereign or not. The American Revolution helped demonstrate this by showing that Britain could still control trade with the colonies without having to pay for their defence and governance.

The end of the old colonial system was most evident in the repeal of the Corn Laws, the agricultural subsidies on colonial grain. The end of these laws opened the British market to unfettered competition, as a result of which grain prices fell and food became more plentiful. The repeal greatly injured Canada, however, whose grain exports lost a great deal of their profitability. During this period, Britain also outlawed the slave trade in the early 19th century and soon began enforcing this principle on other nations. By the end of the 19th century Britain had eradicated the world slave trade.

Some argue that this push for free trade was merely because of Britain's economic position and was unconnected with any true philosophical dedication to free trade. The period, roughly between the Congress of Vienna of 1815 and the Franco-Prussian War of 1870, saw Britain as the world's leading economic Power. It was the world's sole industrialized nation. Following the defeat of Napoleon, Britain was the "workshop of the world", meaning that its finished goods were produced so efficiently and cheaply that they could often undersell comparable, locally manufactured goods in almost any other market. If political conditions in a particular overseas markets were stable enough, Britain could benefit its economy through free trade alone without having to resort to formal rule or mercantilism. Britain was even supplying half the needs in manufactured goods of such nations as Germany, France, Belgium, and the United States.

But Britain's empire had already begun its transformation into the modern Commonwealth, as the white colonies of Newfoundland (1855), Canada (1867), Australia (1901), New Zealand (1907), and the newly-created Union of South Africa (1910) became federated self-governing Dominions. Nevertheless, their independence with regard to foreign policy and defense remained incomplete, and Britain's declaration of war in World War I applied to all its dominions.

Long-term economic trends led Britain to be more receptive to the desires of those with overseas investments, often backed by British intervention abroad. To a lesser extent other industrializing nations, such as the United States and Germany, followed a similar course of development.

During the First Industrial Revolution, the industrialist replaced the merchant as the dominant figure in the capitalist system. In the last decades of the nineteenth century, when the ultimate control and direction of large areas of industry came into the hands of financiers, industrial capitalism gave way to financial capitalism. The establishment of mammoth industrial empires and the ownership and management of their assets by men divorced from production were the dominant features of this third phase.

Amalgamation of industry, in the forms of larger corporations and mergers and alliances of separate firms, and technological advancement during the Second Industrial Revolution, particularly the increased utilization of electric power and internal combustion engines fueled by coal and petroleum, were mixed blessings for British business during the late Victorian era. The prior development of more intricate and efficient machines along with monopolistic mass-production greatly expanded output and lowered production costs. As a result, production often exceeded domestic demand. Among the new conditions, more markedly evident in Britain, the forerunner of Europe's industrial states, were the long-term effects of the severe "Long Depression" of 1873-1896, which had followed fifteen years of great economic instability. Business after 1873 in practically every industry suffered from lengthy periods of low, and falling, profit rates and price deflation.

This is the case even in a Britain with an industrial sector arguably declining due to the rise of finance. Amalgamation of industry and banks, through their connection with industry, enabled finance to exert a great deal of control over the British economy and politics. During the period of cut-throat competition of the mid-Victorian era, producers became aware of the advantages of consolidation, in the forms of larger corporations, but also of mergers and alliances of separate firms, such as mass-production, lobbying power, and efficient union[?] busting. To create and operate such industrial cartels required larger sums than the manufacturer could ordinarily provide, resulting in a new capitalist stage of development.

By the 1870s, London financial houses thus achieved an unprecedented control of industry, contributing to increasing concerns among elite policymakers regarding British protection of overseas investments, particularly those made in the securities of foreign governments and in foreign-government-backed development activities such as railroads. Although it had been official British policy for years to support such investments, with the large expansion of these investments after about 1860 and with the economic and political instability of many areas of high investment (such as Egypt), calls upon the government for methodical protection became increasingly pronounced in the years leading up to the Crystal Palace Speech. After the more gentlemanly service sector of the economy (banking, insurance, shipping) became more prominent, possibly at the expense of manufacturing, the influence of London's financial interest began rising precipitously.

The "cleaner" financial sector probably had an effect on the decisions taken by Britain's disproportionately aristocratic bureaucrats and parliamentarians. Late-Victorian political leaders, most of whom were stockholders, shared a common culture with the financial class." This prompted imperial critic J. A. Hobson[?] to conclude that the finance sector was manipulating events to its own profit. Modern historians, such as Bernard Porter, P.J. Cain and A.G Hopkins do not downplay the influence of the financial interests of "the City" either, but contest Hobson's conspiratorial overtones and "reductionisms". Nevertheless, they often acted as repositories of the surplus capital accumulated by a monopolistic system and they were therefore the prime movers in the drive for imperial expansion, their problem being to find fields for the investment of capital.

Foreign trade tripled in volume between 1870 and 1914, although (again) most of the activity occurred among the industrialized countries, or between them and their suppliers of primary goods or their new markets. In 1913, only 11 percent of the world's trade took place between primary producers themselves. Britain ranked as the world's largest trading nation in 1860, but by 1913 it had lost ground to both the United States and Germany: British and German exports in that year each totaled $2.3 bullion, and those of the United States exceeded $2.4 billion. More significant was the emigration of their goods and capital.

As foreign trade increased, so in proportion did the amount of it going outside the Continent. In 1840, 7.7 million pounds of her export and 9.2 million pounds of her import trade was done outside Europe; in 1880 the figures were 38.4 million and 73 million. Europe's economic contacts with the wider world were multiplying, much as Britain's had been doing for years. In these non-industrial regions (such as the Russian and Ottoman empires), which were the principal destinations of surplus French capital, and in other overseas territories that lacked both the knowledge and the power to direct the capital flow, this investment served to colonize rather than to develop them, destroying native industries and creating dangerous political and economic pressures which would, in time, produce the so-called "north/south divide". The contemporary Dependency Theory, devised largely by Latin American academics, draws on this inference.

But less developed nations with little surplus capital, such as Italy, participated in colonial expansion as well. So did the great Powers of the next century, namely the United States and Russia, which were both in fact, net borrowers of foreign capital. There are also many instances in which foreign rulers needed and requested Western capital, such as the hapless modernizer Khedive Ismail Pasha[?].

As the first country to industrialize, Britain had been able to draw on most of the accessible world for material and markets. But this situation gradually deteriorated during the nineteenth century when others caught up and sought to use the state to guarantee their markets and sources of supply. Again, in varying degrees, the German, Japanese, and Italian states managed to create a sufficiently powerful military machines to be able to make the wishes of their rulers felt in the arena of international politics, contending that Britain's position of World Power gave its manufacturers unfair advantages in international markets, thus limiting the economic growth of other countries.

Among the new conditions, more markedly evident in Britain, the forerunner of Europe's industrial states, was the long-term effects of the severe "Long Depression" of 1873-96, which had followed fifteen years of great economic instability. Business after 1873 in practically every industry suffered from lengthy periods of low, and falling, profit rates and price deflation. As the Long Depression of 1873 bred longstanding fears regarding economic decline and the emergent strength of trade unionism and socialism, Europe had descended into an era of aggressive national rivalry with newly industrializing nation-states merely securing colonies before they strictly professed to needing them.

By the 1870s, British manufactures in the staple industries of the Industrial Revolution were beginning to experience real competition abroad in the colonies and major developing markets, such as China, Russia, and Latin America. Industrialization progressed dynamically in Germany and the United States, allowing them to clearly prevail over the "old" French and English capitalisms. The German textiles and metal industries, for example, had, by the beginning of the Franco-Prussian War, surpassed those of Britain in organization and technical efficiency and usurped British manufactures in the domestic market. By the turn of the century, the German metals and engineering industries would be producing heavily for the free trade market of what was once known as the "workshop of the world" as well. While invisible financial exports actually kept Britain's balance of trade "out of the red," its share of world trade fell from a quarter in 1880, to a sixth in 1913, and to an eighth in 1948. Britain was no longer supplying half the needs in manufactured goods of such nations as Germany, France, Belgium, and the United States. By the outbreak of the Franco-Prussian War, Britain was no longer the 'workshop of the world', meaning that its finished goods were no longer produced so efficiently and cheaply that they could often undersell comparable, locally manufactured goods in almost any other market. Britain was even growing incapable of dominating the markets of India, (a crown colony by 1858 that Disraeli would later deem "the brightest jewel of the crown"), or Manchu China, or the coasts of Africa, or Latin America.

Worldwide, other industrializing nations followed Brtain's lead in foreign trade. Foreign trade tripled in volume between 1870 and 1914, although (again) most of the activity occurred among the industrialized countries, or between them and their suppliers of primary goods or their new markets. In 1913, only 11 percent of the world's trade took place between primary producers themselves. Britain ranked as the world's largest trading nation in 1860, but by 1913 it had lost ground to both the United States and Germany: British and German exports in that year each totaled $2.3 bullion, and those of the United States exceeded $2.4 billion. Formal imperialism was one of many strategies to secure overseas markets for investments, which also included trade between industrialized nations, unequal trading practices with nominally independent "dying nations", monocultural economies in Latin America, and the partitioning of China into spheres of influence.

German advocates of formal imperialism, meanwhile argued that Britain's World Power position gave the British unfair advantages in international markets, thus limiting Germany's economic growth and threatening its security. Many European statesmen and industrialists wanted to accelerate this process, securing colonies before they strictly needed them. Their reasoning was that markets might soon become glutted, and a nation's economic survival depended on its being able to offload its surplus products elsewhere. In response, British reactionaries, such as Joseph Chamberlain, thus concluded that formal imperialism was necessary for Britain because of the relative decline of its share of the world's export trade and the rise of German, American, and French economic competition. Following the lead of Britain under Disraeli, the once hesitantly imperialist Bismarck was eventually brought to realize the value of colonies for securing (in his words) "new markets for German industry, the expansion of trade, and a new field for German, activity, civilization, and capital". The absolutist Central Powers, led by a newly unified, dynamically industrializing Germany, with its expanding navy, doubling in size between the Franco-Prussian War and the Great War, were strategic threats to the markets and security of the more established Allied Powers and Russia. France and Britain were thus forced to end their centuries of longstanding hostility.

These economic trends illustrated why it would have been desirable for emerging Powers like Germany, Japan, and Italy to usurp British hegemony over overseas markets, especially during the Great Depression of 1873, but shifts in the European balance of power facilitated formal overseas expansionism, spreading the allure of imperialism beyond the traditional Great Powers of France and Britain. The breakdown of the Concert of Europe set up by the reactionary Congress of Vienna and the consequent establishment of nation-states in Germany and Italy freed Germany and Italy from being as embroiled in continental concerns and domestic disputes as they were before the Franco-Prussian War.

According to Immanuel Wallerstein, the foremost scholar of World Systems Theory, the leading conservative monarchies that fostered modernization within the framework of aristocratic state structures, such as Germany and Japan, were engaged in a form of neo-mercantilism. Wallerstein's conception of imperialism as a part of a general, gradual extension of capital investment from the centre of the industrial countries to an overseas periphery thus coincides with Hobson's. Wallerstein's, "Mercantilism" became the major tool of [newly industrializing, increasingly competitive] semi-peripheral countries [Germany, France, Italy, Belgium, etc.] seeking to become core countries . Wallerstein thus sees formal empire as "analogous to that of the mercantilist drives of the late seventeenth and eighteenth centuries in England and France." The expansion of the Industrial Revolution hence contributed to the emergence of an era of aggressive national rivalry, leading to the late nineteenth century "Scramble for Africa" and formal empire.

Protectionism and formal empire, characteristic of an era of neo-mercantilism during the age of New Imperialism, thus became the major tool of 'semi-peripheral', newly industrialized states, such as Germany, seeking to usurp Britain's position at the 'core' of the global capitalist system . The "neo-mercantilist" practices of newly industrializing states such as Germany, the United States, and Japan cut Britain off from outlets and even created competition for Britain in sales to these 'peripheral' areas.

In a scramble for overseas markets between the Franco-Prussian War and World War, European nations added almost 9 million square miles, one-fifth of the land area of the globe, to their overseas colonial possessions. Ushering out the cavalier colonialism of the mid-Victorian era, the age of Pax Britannica, the late nineteenth century Romantic Age was an era of "empire for empire's sake". But scholars debate the causes and ramifications of this period of colonialism, dubbed "The New Imperialism" to distinguish it from earlier eras of overseas expansion, such as the mercantilism of the sixteenth to eighteenth centuries or the liberal age of "free trade" colonialism of the mid-nineteenth century. The 1885 Congress of Berlin, initiated by Bismarck to establish international guidelines for the acquisition of African territory, formalized this new phase in the history of Western imperialism.

The "Scramble for Africa", accompanied by Rudyard Kipling-style racism and Social Darwinism in predominantly Protestant empires and the paternalistic (but republican and progressive) French-style "mission of civilization", was attractive to many European statesmen and industrialists who wanted to accelerate the process of securing colonies upon anticipating the prospective need to do so. Their reasoning was that markets might soon become glutted, and that a nation's economic survival depended on its being able to offload its surplus products elsewhere.

At a time when the abandonment of free trade limited the European market, some business and government leaders, such as Leopold II and Jules Ferry, concluded that sheltered overseas markets would solve the problems of low prices and over-accumulation of surplus capital caused by shrinking continental markets. Among the new conditions were the short-term effects of the severe economic depression of 1873, which had followed fifteen years of great economic instability. Business after 1873 in practically every industry suffered from lengthy periods of low profit rates and deflation; profits were falling because too much capital were chasing too few markets, especially after the rise of newly industrializing states in the export trade with its traditional markets in continental Europe, China, and Latin America.

In addition, such surplus capital was often more profitably invested overseas, where cheap labor, limited competition, and abundant raw materials made a greater premium possible. Another inducement to imperialism, of course, arose from the demand for raw materials unavailable in Europe, especially copper, cotton rubber, tea, and tin, to which European consumers had grown accustomed and upon which European industry had grown dependent.

But imperial rivalry played an even greater role. With contending, emerging Capitalist Powers once dependent on British industry ready to vie for competing stakes in overseas markets, inter-capitalist competition also took the form of protectionism through higher tariffs, further aggravating the push toward overseas markets: in Germany in 1879, and again following 1902: in the United States in 1890; in France in 1892, 1907, and 1910. The only country to escape this trend was Britain, whose essential strength lay precisely in its pre-eminence on the world market. German, American, and French imperialists, as mentioned, argued that Britain's World Power position gave the British unfair advantages on international markets, thus limiting their economic growth.

This affected Britain in two ways. Firstly, of course, the new interests of the emergent industrial Powers in colonial expansion brought them into direct competition with Britain. The expansion of the Second Industrial Revolution and the rise of similar economic practices (such as amalgamation of industry) in Germany and the United States intensified the competition for overseas markets and hence formal colonialism.

Benjamin Disraeli and Queen Victoria

By the time Disraeli ushered in the age of New Imperialism with his watershed Crystal Palace Speech expressing the sentiment of Empire for Empire's sake, which was delivered, by no mere coincidence, after the Franco-Prussian War and during the Long Depression, Britain was no longer the world's sole modern, industrial nation. Pessimists thus inferred that unless Britain acquired secure colonial markets for its industrial products and secure sources of raw materials, the other industrial states would seize them themselves and would precipitate a more rapid decline of British business, power, and standards of living. The prospect of having to compete to remain the forerunner of the world's economies and empires due to recent changes in the global economy and continental balance of power thus left it ripe for Disraeli's Conservative rule in the 1870s, which would usher in an era of extreme national rivalry that would one day culminate in the Great War.

In this sense, historian Bernard Porter argues that formal imperialism for Britain was a symptom and an effect of its relative decline in the world, and not of strength. Symbolic overtures, in fact, such as Queen Victoria's grandiose title of "Empress of India", celebrated during Disraeli's second premiership in the 1870s, helped to obscure this fact. Joseph Chamberlain thus argued that formal imperialism was necessary for Britain because of the relative decline of the British share of the world's export trade and the rise of German, American, and French economic competition.

Since the "Scramble for Africa" was the predominant feature of New Imperialism and formal empire, opponents of Marxist theory often point to frequent cases when military and bureaucratic costs of occupation exceeded financial returns. In Africa (exclusive of South Africa) the amount of capital investment by Europeans was relatively small before and after the 1885 Congress of Berlin, and the companies involved in tropical African commerce were small and politically insignificant, exerting only a tiny influence on domestic politics.

At first sight, this observation might seem to detract from the pro-imperialist arguments of Leopold II, Francesco Crispi, and Jules Ferry, but Hobson (the liberal English economist who devised the accumulation theory that would form the basis of the Marxist critique of imperialism, argued against imperialism from a slightly different standpoint. He concluded that financial interests were manipulating events to their own profit, but often against broader national interests.

However, any such statistics only obscure the fact that African formal control of tropical Africa had strategic implications in an era of feasible inter-capitalist competition, particularly for Britain, which was under intense economic and thus political pressure to secure lucrative markets such as India, China, and Latin America. In Britain's case this process of capitalist diffusion had in many regions led it to acquire colonies in the interests of commercial security; France and Germany would later follow suit. For example, although the then inconspicuously moribund Czarist Empire proved to be little threat to Great Britain following its stunning defeat in the 1905 Russo-Japanese War, British Conservatives in particular feared that Russia would continue to usurp Ottoman territory and acquire a port on the Mediterranean or even Constantinople, a long touted goal of the Orthodox faith.

These fears became especially pronounced following the 1869 completion of the nearby Suez Canal, prompting the official rationale behind Disraeli's purchase of the waterway. The close proximity of the Czar's (territorially) expanding empire in Central Asia to India also terrified Lord Curzon, thus triggering the Afghan Wars. Rhodes[?] and Milner also advocated the prospect of a "Cape to Cairo" empire, which would link by rail the extrinsically important canal to the intrinsically mineral and diamond rich South, from a strategic standpoint. Though hampered by German conquest of Tanganyika until the end of the Great War, Rhodes successfully lobbied on behalf of such a sprawling East African empire.

Formal colonies were often, in hindsight, strategic outposts to protect large zones of investment, such as India, Latin America, and China. Britain, in a sense, continued to adhere to the Cobdenite notion that informal colonialism was preferable; the established consensus among industrial capitalists during the age of Pax Britannica between the downfall of Napoleon and the Franco-Prussian War. What changed since the Disraeli's Crystal Palace Speech was not necessarily a preference for colonialism over informal empire, but the attitude toward formal rule in largely tropical areas once considered too backward for trade. Sovereign areas already hospitable to informal empire largely avoided formal rule during the shift to New Imperialism. China, for instance, was not a backward country unable to secure the prerequisite stability and security for western-style commerce, but a highly advanced empire unwilling to admit western (often drug-pushing) commerce, which may explain the West's contentment with informal "Spheres of Influence". China, unlike tropical Africa, was a securable market without formal control.

Following the First Opium War, British commerce, and later capital invested by other newly industrializing powers, was securable with a smaller degree of formal control than in Southeast Asia, West Africa, and the Pacific. But in many respects, China was a colony and a large-scale receptacle of Western capital investments. Western Powers did intervene there military to quell domestic chaos, such as the horrific Taiping Rebellion and the anti-imperialist Boxer Rebellion. For example, General Gordon, later the imperialist "martyr" in the Sudan, is often credited with saving the Manchu dynasty from the Taiping insurrection.

Colonialism in India, however, should dissuade people from making sweeping generalizations and over-simplifications regarding the roles of inter-capitalist competition and accumulated surplus in precipitating the era of New Imperialism. Formal empire in India, beginning with the Government of India Act of 1858, was a means of consolidation, reacting to the abortive Sepoy Rebellion, which was in itself a conservative reaction among Indian traditionalists to the Dalhousie era of liberalization and consolidation of the subcontinent. Local concerns in particular zones of investment, hence, should be of concern as well.

Formal empire in Sub-Saharan Africa, the last vast region of the world largely untouched by "informal imperialism" and "civilization", was also attractive to Europe's ruling elites for other potential reasons. Firstly, insofar as the "Dark Continent"; was agricultural or extractive, and no longer "stagnant" since its integration with the world's interdependent capitalist economy, it required more capital for development that it could provide itself. Secondly, during a time when in nearly every year since the 1813 liberalization of trade onward, Britain's balance of trade showed a deficit, and at a time of shrinking and increasingly protectionist continental markets, Africa offered Britain an open market that would garner it a trade surplus, a market that bought more from the metropole than it sold overall. Britain, like most other industrial countries, had long since begun to run an unfavorable balance of trade (which was increasingly offset, however, by the income from overseas investments). As perhaps the world's first post-industrial nation, financial services became an increasingly more important sector of its economy. Invisible financial exports, as mentioned, kept Britain out of the red, especially capital investments outside Europe, particularly to the developing and open markets in Africa, predominantly white "settler colonies", the Middle East, the Indian Subcontinent, Southeast Asia, and the South Pacific.

Each of Britain's major elites also found some advantages in formal, overseas expansion: mammoth monopolies wanted imperial support to secure overseas investments against competition and domestic political tensions abroad; bureaucrats wanted more occupations, military officers desired promotion, and the traditional but waning landed gentry wanted formal titles. Observing the rise of trade unionism, socialism, and other protest movements during an era of mass society in both Europe and later North America, the elite in particular was able to utilize imperial "jingoism" to co-opt the support of the impoverished industrial working class. Riding the sentiments of the late nineteenth century Romantic Age, imperialism inculcated the masses with "glorious" neo-aristocratic virtues and helped instill broad, nationalist sentiments.

Until the dismissal of the aging Chancellor Bismarck by the pigheaded and belligerent Kaiser Wilhelm II, the expropriation of vast, unexplored areas of Asia and Africa by emerging imperial Powers such as Italy and Germany and more-established empires such as Britain and France was nevertheless relatively orderly.

The Entente Cordiale was a gentleman's agreement between Britain and France designed to curtail further German expansion. Along with the Franco-Russian alliance, served a common geopolitical interest, the Anglo-French Entente served a common interest. British policymakers feared the prospect of another German military victory over France like the Franco-Prussian War, which could have reasonably resulted in a German take-over of France's formal colonies, a sort of reversal of the actual outcome of the Great War, after which Britain occupied the vast majority of German and Ottoman colonies as "protectorates". This prospect was especially frightening considering that French colonies tended to be closely situated to Britain's; Nigeria, for instance, was surrounded by French territory, India was near French Indochina, and so forth.

Strategic competition between Britain and Germany following the retirement of Bismarck, the era's greatest diplomat, would intensify the drive to consolidate existing spheres of influence and grab new colonies. Examples of these conflicts include the Moroccan Crisis of 1905 and the Tangier Crisis. These conflicts began with Kaiser Wilhelm's recognition of Moroccan independence from France, Britain's new strategic partner. During the Second Moroccan Crisis, Germany sent its navy to Morocco, testing the precarious Anglo-French Entente once again.

The Central Powers, led by a newly unified, dynamically industrializing Germany, with its expanding navy, doubling in size between the Franco-Prussian War and the Great War, were a strategic threat to the markets of these relatively declining empires that would one day become the Allies of the Great War.

However, although Britain emerged victorous from World War I, and although the empire expanded into new areas once held by the Germans and Ottomans, the heavy costs of the war created a climate within both the public and policy elites that was increasingly skeptical of the benefits of empire and unwilling to bear its costs. Within this context, the Dominions were recognised as fully independent states under the British crown by the 1926 Balfour Declaration[?] and the 1931 Statute of Westminster. In addition the Government of India Act of 1935[?] established limited self-government within India and committed Britain to eventually granting Indian independence.

The Irish Free State, accorded Dominion status in 1921 after a bitter war against British rule, ended its formal constitutional link with the crown in 1937 (renaming itself Éire), and became the Republic of Ireland outside the Commonwealth in 1949. Egypt, formally independent from 1922 but bound to Britain by treaty until 1936 (and under partial occupation until 1956) similarly severed all constitutional links with Britain.

The end of Empire gathered pace after Britain's efforts during World War II left the country all but exhausted and the rise of nationalism added to pressure on the government. Post-war decolonisation was accomplished with almost unseemly haste, with Britain rarely fighting to retain any territory. The independence of India in 1947 ended a 40-year struggle by the Indian National Congress for first self-government and later full sovereignty, though the land's partition into India and Pakistan entailed violence costing hundreds of thousands of lives. The acceptance by Britain, and the other Dominions, of India's adoption of republican status (1949) is now taken as the start of the modern Commonwealth.

One of the turning points of British Empire was the Suez Crisis of 1956 in which both the new superpowers, the United States and the Soviet Union made it clear that they would not support Britain's foreign policy objectives and that both were supportive of anti-colonial nationalist movements.

In the Mediterranean, a guerrilla war waged by Greek Cypriot advocates of union with Greece ended (1960) in an independent Cyprus.

The end of Britain's Empire in Africa came with exceptional rapidity, often leaving the newly-independent states ill-equipped to deal with the challenges of sovereignty: Ghana's independence (1957) after a ten-year nationalist political campaign was followed by that of Nigeria (1960), Sierra Leone and Tanganyika (1961), Uganda (1962), Kenya and Zanzibar (1963), The Gambia (1965), Botswana (formerly Bechuanaland) and Lesotho (formerly Basutoland) (1966), and Swaziland (1968).

British withdrawal from the southern and eastern parts of Africa was complicated by the region's white settler populations: Kenya had already provided an example in the Mau Mau Uprising of violent conflict exacerbated by white landownership and reluctance to concede majority rule. Although the white-dominated Federation of Rhodesia and Nyasaland[?] ended in the independence of Malawi (formerly Nyasaland) and Zambia (the former Northern Rhodesia) in 1964, Southern Rhodesia's white minority (effectively self-governing since 1923) declared independence rather than submit to African government. The support of South Africa's white minority government kept the Rhodesian regime in place until 1979, when agreement was reached on majority rule in an independent Zimbabwe.

Most of Britain's Caribbean territories opted for eventual separate independence after the failure of the West Indies Federation (1958-61): Jamaica and Trinidad & Tobago (1962) were followed into statehood by Barbados (1966) and the smaller islands of the eastern Caribbean (1970s and 1980s). Britain's Pacific dependencies underwent a similar process of decolonisation in the latter decades. At the end of the lease, Hong Kong was handed back to Chinese in 1997.